court of justice

12 Feb 23

In a case that could have implications for landlords across the country, Leicester City Council is appealing against a First-tier Tribunal decision that substantially reduced a civil financial penalty they had imposed for an HMO licensing offence.

The case concerns a small two-storey HMO on the outskirts of Leicester which was let to four individual tenants, each on a separate AST. It was maintained in good condition and well-managed.

There was a small fifth room measuring just 4.7m2 which the landlord is adamant she had never let out as it was too small. One tenant said a fifth person lived in that room, whilst another tenant said they used the room for storage, but allowed a homeless friend to sleep in their for a few weeks without telling the landlord. The council found no one living in the room when they visited and never traced the fifth person.

Believing that five people had occupied the property, the council imposed a hefty civil financial penalty of £29,817. A penalty towards the very top end of the scale which is reserved for the most serious offenders.

The landlord successfully appealed against the penalty and was represented by London Property Licensing. Following a video hearing, the First-tier Tribunal reduced the penalty to £3,900. The council sought permission to appeal the decision, which was refused. The council then petitioned the Upper Tribunal direct and their request to appeal was granted.

The grounds of appeal raise important issues that could impact on future civil financial penalties as the outcome will become case law. For example:

Is it reasonable for council policy to determine every HMO licensing offence is automatically of very high seriousness and warrants a much higher penalty regardless of the circumstances?

Can the council assume the offence had been ongoing for a longer period of time whilst a council officer acknowledged it was just their belief?

Can the council add their costs incurred in imposing a civil financial penalty to further increase the level of civil penalty imposed? This is not referred to in the statutory guidance and the whole amount is paid to the council anyway. Effectively, it means the council is paid twice.

The case raises important issues about the criminal standard of proof and how the statutory civil penalty guidance should be properly applied when calculating any penalty imposed.

The case will be heard on Tuesday 2 May 2023 at the Royal Courts of Justice in London. Whilst grounds for objection have already been submitted, Counsel representation for the hearing and preparation of skeleton arguments is estimated to cost up to £8,000. With the landlord struggling to afford these high costs and the case having much wider implications, any crowdfunded or similar support would help to ensure Counsel can be appointed to provide representation and fully argue the grounds of appeal before the Upper Tribunal.

First-tier Tribunal reference: BIR/00FN/HNA/2022/0019.

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