Kazi v Bradford Metropolitan District Council

Housing – Civil penalty – Mitigation – Respondent landlord accommodating tenants in house in multiple occupation – Appellant local authority serving improvement notices on respondent – Appellant imposing civil penalties for failure to comply with notices and HMO offences – First-tier Tribunal upholding penalties – Upper Tribunal allowing respondent’s appeal – Appellant appealing – Whether appellant’s discretion in determining appropriate penalties fettered by policy on private sector housing enforcement – Appeal allowed The respondent was an experienced landlord who owned properties in Bradford, including 2 Laisteridge Lane, a large four-storey house converted (without planning permission) into eight self-contained flats. It was a house in multiple occupation (HMO) because the conversion did not comply with building regulations. In June 2021, the appellant inspected the property and served eight improvement notices on the respondent. Failure to comply with an improvement notice was an offence under section 30(1) of the Housing Act 2004. Under section 234, it was an offence to fail to comply with a regulation made under that section, and section 234(4) provided a defence of reasonable excuse. Section 249A enabled a local housing authority to impose a financial penalty as an alternative to prosecution. The appellant imposed civil penalties on the respondent in respect of offences under section 30 and breach of the HMO Regulations, contrary to section 234. Those penalties were determined by the appellant pursuant to its Private Sector Housing Enforcement Policy, in particular Appendix 1 relating to penalties. On appeal, the First-tier Tribunal determined that the total payable by the respondent was £47,290.31. The Upper Tribunal allowed the respondent’s appeal, concluding that the appellant’s policy fettered its discretion in determining the appropriate penalties, and the FTT also fettered its discretion by applying that policy. The UT remade the decision and determined that £10,000 would be the appropriate penalty: [2023] UKUT 263 (LC); [2023] PLSCS 185. Held: The appeal was allowed. (1) The appellant contended, amongst other things, that the UT erred in construing the appellant’s policy which contained an absolute limit on the amount by which a penalty might be reduced in respect of mitigating features so as, arguably, to fetter its discretion. The aim of the appellant’s policy was to secure effective compliance with legislation while minimising the burden to the appellant, individuals, organisations and businesses. The policy was explained in general terms, as it was intended to be applied in a wide range of situations, the approach adopted by the private sector housing service when carrying out the appellant’s powers to enforce a wide range of legislation. (2) A matrix of harm and culpability formed part of the appellant’s policy. The FTT identified the culpability aspect as high, on the basis of the respondent’s history of non-compliance and the fact he was an experienced landlord. The risk of harm was identified as medium. Putting those together gave a starting point for each offence of £15,000. For each aggravating or mitigating factor which applied to each specific case the level of fine would normally be adjusted by 5% of the initial fine, up to the statutory maximum of £30,000 or to the minimum fine for each determined level of culpability and harm. (3) The only exception to that principle was concerned with the impact of one particular aggravating factor, ie, items of non-compliance. Clearly there could be a number of such items, and the total uplift normally, in a case with from 1 to 5 (inclusive) items of non-compliance, would be a single 5% figure. If there were more than five items then a single figure of 10% would normally be imposed. That was not a hard and fast rule. Multiple items of non-compliance, just as in this case, were likely to be routine. Standing back, it was a sensible and fair attempt to deal with multiple items of non-compliance, otherwise the way in which an enforcement notice had been drafted, which would enumerate and set out the items required to be fixed, could matter more than the substance. (4) Any policy was unlikely to take account of every situation. Each case needed to be considered on its merits and the policy was to operate as a guide to council officers. Reading it as a whole, the policy did not fetter the decision maker’s discretion on penalties. The percentage to be applied for a given item of mitigation would normally be 5% but it did not have to be and all the circumstances were relevant. Factors could be added together individually and therefore mitigation could accumulate. The same was true for aggravating factors. When considering aggravating factors, the fact that two items of non-compliance would normally produce a single 5% uplift, just as one item would, was sensible, did not undermine the flexibility of the rest of the policy and was itself qualified by the term “normally”. (5) The UT did not have the assistance that the Court of Appeal had had on the policy as a whole. Irrespective of whether the UT’s decision about the rationality and lawfulness of the policy was open to it or not, in fact, on analysis those aspects of the policy did not operate as a fetter on discretion nor were they marred by any lack of clarity. It followed that the FTT, in basing its approach on the policy, was not acting in error. The language used in its decision showed that the FTT had turned its mind to whether 5% was reasonable. That was inconsistent with the idea that the FTT thought it was bound to award that percentage and no other. Accordingly, the UT erred in finding that the FTT and/or the appellant had fettered their discretion when imposing the financial penalties. (6) There was nothing wrong with the FTT’s conclusion in relation to the section 234 penalty. That was a penalty of £13,500, based on starting from £15,000 and applying two 5% discounts for the two items of mitigation. The Court of Appeal was setting aside the decision of the UT and exercising the power under section 14(2)(b)(ii) of the Tribunals Courts and Enforcement Act 2007 to re-make the decision. In taking that course, the court had all the powers of UT: see section 14(4) of the 2007 Act. There was no reason not to apply the normal discount of 5% provided for in the appellant’s policy. That was a reasonable, appropriate and proportionate sum in this case. The result was that the section 30 offences should each attract a penalty of £13,500. Riccardo Calzavara and Jeremy Ogilvie Harris (instructed by City of Bradford Metropolitan District Council) appeared for the appellant; The respondent appeared in person. Eileen O’Grady, barrister Click here to read a transcript of Kazi v Bradford Metropolitan District Council