Waltham Forest London Borough Council v Marble Properties (London) Ltd; Waltham Forest London Borough Council v First-tier Tribunal (Property Chamber)

Housing – Civil penalty – First-tier Tribunal – Respondent manager of house in multiple occupation committing licensing offence – Appellant local authority imposing civil penalty – First-tier tribunal reducing penalty – Respondent appealing – Appellant applying for judicial review of tribunal’s decision to review original decision – Whether appellant’s policy being “too rigid” – Whether FTT properly exercising power to review decision – Appeal allowed – Application dismissed The respondent managed a house at 1 Janson Road, London E15, on behalf of a landlord. The property was a house in multiple occupation. It should have been licensed under an additional licensing scheme for HMOs introduced by the appellant local authority in April 2020 under Part 2 of the Housing Act 2004. The respondent was aware of the need to obtain a licence but did not apply until 28 January 2022. By managing the house without a licence, the respondent committed an offence under section 72 of the 2004 Act. Rather than prosecuting the respondent, the appellant imposed a civil penalty of £12,000. It offered a 20% discount if the penalty was paid within 28 days. The respondent did not pay but exercised its right to appeal to the First-tier Tribunal. The FTT reduced the penalty to £6,000, deciding that the appellant had misunderstood its own enforcement policy. The appellant appealed against the FTT’s decision to reduce the penalty. The FTT then reviewed its decision, adding an alternative justification for reducing the penalty. It decided that if the appellant’s interpretation of its policy was correct, the policy was “too rigid” and the FTT was entitled not to follow it. Therefore, the appellant also applied for judicial review of the FTT’s decision to review its original decision, which led to the inclusion of its additional reasoning. The appellant said the FTT had no power to review its decision in that way. Held: The appeal was allowed. The application was dismissed. (1) A local housing authority was required by paragraph 12 of schedule 13A to the Housing Act 2004 Act to have regard to guidance given by the secretary of state in relation to financial penalties. Relevant guidance was issued in April 2017 which encouraged the formulation of an enforcement policy. The appellant took that guidance into account when it revised its policy in 2020 to incorporate an appendix dealing specifically with civil penalties under section 249A. The appellant had, as central government required, a policy to ensure fairness in the size of financial penalties imposed. Penalties ranged from “moderate”, band 1, £0-£4,999 and band 2, £5,000 to £9,999; through “serious”, band 3, £10,000 to £14,999 and band 4, £15,000 to £19,999; to “severe”, band 5, £20,000 to £24,999 and band 6, £25,000 to £30,000. The better way for a decision-maker to give effect to the intent of the policy was to approach the assessment without a preconceived starting point, other than that the figure would be within the range for the band into which the offence fell unless there were exceptional circumstances.  (2) Even a decision-maker who treated the policy as mandating a starting point of £15,000 could not properly have proceeded to a final figure by the route taken by the FTT (in the absence of exceptional circumstances). The policy was explicit in placing the respondent’s offence of managing an unlicensed HMO in the higher of the two “serious” bands and as requiring exceptional circumstances before a penalty outside that band could be imposed. That was the FTT’s principal error.  It was also wrong to consider mitigating factors before selecting a band, but it was only able to adopt that approach because it regarded itself as having a choice between bands 3 and 4, which it did not have.   (3) How the appellant chose to deal as a creditor with its own debtors was a matter for the appellant over which the FTT had no jurisdiction and with which it had no business to interfere. It was not for the FTT to declare the appellant’s policy unacceptable, or punish the appellant’s policy choice by reducing the penalty further, whether or not it was paid promptly. If the respondent wished to challenge the FTT’s refusal to provide a discount after an appeal, the proper place to do so was by challenging the policy in the Administrative Court. (4) There is nothing wrong with a policy of allowing a voluntary discount for prompt payment but withholding it where an appeal was pursued. Early payment secured payment, avoided enforcement costs and was likely to mean that there would be no appeal, with all the additional irrecoverable expense that entailed. The value of those benefits would be largely or completely eliminated by the cost of an appeal, whether it was successful or unsuccessful. In those circumstances, there was nothing unjust or unacceptable in a policy which refused to allow the same discount for prompt payment after the amount of a penalty had been redetermined on appeal.  The FTT had misapplied the appellant’s policy and was wrong to allow a gratuitous discount from the penalty it considered appropriate under the appellant’s policy. (5) Rule 55(1) of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 restricted the FTT’s power of review to cases where there had been an application for permission to appeal and prevented the FTT from undertaking a review on its own initiative. Given that restriction, it must have been intended that the power would only be exercisable where one of the parties had sought permission to appeal on the point on which the FTT’s decision was clearly wrong. It could not have been intended that an application for permission to appeal would give the FTT licence to review its decision on a matter which was not challenged in the application. (6) The FTT’s assessment of the policy, or its application in this case, was based on its flawed interpretation of the process of assessment which the policy required. The FTT assumed that the decision-maker was required to begin at the bottom of the relevant band and could not go below it other than in exceptional circumstances. That was thought to be too rigid a policy, or its application too rigid here, because it did not allow for mitigation to be taken into consideration. That was not a proper interpretation of the policy as a whole. The policy required the decision-maker, ordinarily, to determine a penalty within a range from £15,000 to £19,999, taking into account all relevant considerations, including mitigation.  Riccardo Calzavara (instructed by Sharpe Pritchard) appeared for the appellant; the respondent did not appear and was not represented. Eileen O’Grady, barrister Click here to read a transcript of Waltham Forest London Borough Council v Marble Properties (London) Ltd; Waltham Forest London Borough Council v First-tier Tribunal (Property Chamber)