Palmview Estates Ltd v Thurrock Council
| Jurisdiction | England & Wales |
| Judge | Lady Justice Asplin,Lady Justice King,Lady Justice Elisabeth Laing |
| Judgment Date | 09 December 2021 |
| Neutral Citation | [2021] EWCA Civ 1871 |
| Docket Number | Case No: C3/2021/0449 |
| Year | 2021 |
| Court | Court of Appeal (Civil Division) |
[2021] EWCA Civ 1871
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE UPPER TRIBUNAL (Lands Chamber)
Upper Tribunal Judge Elizabeth Cooke
[2020] UKUT 355 (LC)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lady Justice King
Lady Justice Asplin
and
Lady Justice Elisabeth Laing
Case No: C3/2021/0449
Michael Paget (instructed by Palmview Estates Limited) for the Appellant
Nicholas Ham (instructed by Thurrock Council) for the Respondent
Hearing date: 24 November 2021
Approved Judgment
This appeal raises a question about the proper construction of, and approach to, the statutory defence of “reasonable excuse” contained in section 72(5) of the Housing Act 2004 (“the 2004 Act”). The defence is available to a defendant in proceedings brought under section 72(1) of the 2004 Act which creates the offence of having control of or managing a house in multiple occupation which is required to be licensed under Part 2 of the 2004 Act but is not licensed.
Legislative landscape in summary
In order to understand the issue in this appeal it is important to have a grasp of the relevant legislative landscape. The 2004 Act was preceded by a consultation paper in April 1999 and a Green Paper in April 2000. The consultation paper described the health and safety concerns caused by houses in multiple occupation (“HMOs”) and proposed a regime for licensing them. The view of the Government was that such a regime would reduce risk to life and other risks and improve the living conditions for tenants. See R (Mohamed) v Waltham Forest LBC [2020] EWHC 1083 (Admin), [2020] 1 WLR 2929, at [30].
Amongst other things, the 2004 Act defines an HMO and provides for a licensing regime. A licence authorises occupation of the house in question by not more than a maximum number of households or persons specified in the licence (section 61(2)); and the grant of a licence is subject to a series of detailed criteria which applicants must satisfy, relating to the reasonable suitability of the premises for multiple occupation, and the fitness of the applicant to be a licence-holder (sections 64–68).
As far as relevant to this appeal, Part 2 of the 2004 Act provides for HMOs to be licensed by local housing authorities where (i) they are in the relevant authority's district and fall within the relevant “prescribed description” of HMO; and (ii) are required to be licensed under section 61(1). See section 55(1) – (2).
By section 55(3), the appropriate national authority may, by order, prescribe the relevant description of HMOs for the purposes of the HMO licensing regime. On 1 October 2018, the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018 (“the 2018 Order”) came into force, which modified the prescribed description of HMO to include those occupied by five or more persons divided between two or more separate households (article 4).
Section 61(1) of the 2004 Act provides that “[e]very HMO to which this Part applies must be licensed”, subject to two exceptions to which I refer below. Section 63 provides that an application for a licence must be made to the local housing authority, in accordance with any requirements the authority may specify (section 63(1) – (2)).
Section 72(1) of the 2004 Act (which is of direct relevance in this appeal), provides that a person commits an offence if he is “a person having control of or managing an HMO which is required to be licensed” under Part 2 of the 2004 Act, but is not so licensed. Section 249A, however, provides that as an alternative (amongst others) to prosecution for the offence the local authority may impose a civil penalty where it is satisfied beyond reasonable doubt that a person has committed the offence. Schedule 13A to the 2004 Act provides that if the local authority does so, the person upon whom the penalty is imposed may appeal to the First Tier Tribunal Property Chamber (Residential Property) (the “FTT”). On such an appeal the FTT must conduct a re-hearing of the matter, and can impose a penalty only if it is satisfied, beyond reasonable doubt, that the offence was committed.
Relevant factual background
I have taken the facts from the decision of Upper Tribunal Judge Cooke sitting in the Upper Tribunal Lands Chamber (the “UT Judge”), the neutral citation of which is [2020] UKUT 0355 (LC). She, in turn, had taken the facts from the decision of Judge Shepherd and members sitting in the FTT. The FTT decision, which dealt with other alleged offences in addition to the offence under section 72(1) of the 2004 Act, was dated 18 February 2020 and had the case reference CAM-OOKG/HNA/2019/0016. Reference should be made to both of those decisions for the full background details.
Palmview Estates Limited, the Appellant, (“Palmview”) purchased 521 London Road, South Stifford, Grays, Essex (the “Property”) in March 2014 and converted it for occupation, with a shared kitchen, by six people. After complaints from some of the occupants, in September 2017, the Respondent, Thurrock Council (“the Council”) served two Prohibition Notices on Palmview. They were served pursuant to section 20 of the 2004 Act and for these purposes it is relevant to note that they required certain works to be carried out at the Property, including the creation of a kitchen of a suitable size for use by six households. Palmview then built an extension to the kitchen in order to comply with the Notices.
The 2018 Order came into force on 1 October 2018 and, thereafter, an HMO licence was required in relation to the Property. It was common ground before the FTT that Palmview was aware of the new licensing regime and that it owns other properties in relation to which HMO licences are held.
In the meantime, on 3 May 2018, prior planning approval for the extension to the kitchen at the Property had been refused on the basis that a full planning application was required. Palmview appealed that decision and the appeal was allowed on 13 February 2019. The Council undertook further inspections of the Property in March 2019 and wrote to Mr Mordechai Sternlicht on 14 March 2019 about a number of things, including the lack of an HMO licence in relation to the Property. Mr Mordechai Sternlicht is an employee of Palmview Investments Limited, which manages the Property on behalf of Palmview. On 24 May 2019, the Council served a Notice of Intent to Impose a Financial Penalty on the basis of the lack of an HMO licence and served a Final Notice on 9 August 2019, imposing a penalty of £17,500.
Palmview had applied for an HMO licence for the Property on 16 July 2019 and appealed the Final Notice to the FTT on 6 September 2019. It did not dispute that it had been managing or was in control of the Property without an HMO licence. It relied upon the defence set out in section 72(5) of the 2004 Act. It was said that Palmview had a reasonable excuse for not having an HMO licence for the Property because Mr Mordechai Sternlicht had been informed by an employee in the Council's planning department that there was no point in applying for an HMO licence whilst the planning position in relation to the kitchen remained in dispute.
The FTT and the UT
As this appeal turns upon whether the UT and the FTT before it, erred in law in the way in which section 72(5) should be construed and the defence which it contains should be approached, it is important to set out the way in which the FTT dealt with the matter in some detail. First, at [1] it set out the alleged offences in relation to which the Notices had been served including at [a)] the alleged offence of being a person having control of or managing an HMO which is required to be licensed under section 61(1) of the 2004 Act but is not so licensed which it described as the “ license offence” (adopting an unorthodox spelling, as it did at other parts of its decision).
At [2], the FTT explained that the Council alleged that Palmview “failed to apply for an HMO licence” for the Property for the period from 1 October 2018 when the 2018 Order came into effect until it applied for a licence on 16 July 2019. The FTT went on, also at [2], to state that: “… It was common ground that the premises are an HMO and that the Appellants [Palmview] knew of the mandatory licensing regime however the Appellants [Palmview] maintain that they have a reasonable excuse for not having a licence at the relevant time namely that they were led to believe by the Respondents that they would not get a licence.”
At [3], the FTT set out the relevant parts of section 61 of the 2004 Act, which contain the requirement for HMOs to be licensed and section 72(1) and (5), being the relevant offence and the defence relied upon.
Thereafter, at [19] the FTT recorded that: Mr Sterlicht had said in evidence that he had understood that until the kitchen was extended an HMO licence would not be granted and that he was given the option for applying for a Temporary Exemption Notice under section 62 of the 2004 Act; he did not want to do so because he did not want to convert the Property back into a single residential unit; and he said that he had not been advised to apply for a licence on the basis that conditional permission might be given; and he considered that he was in a Catch 22 situation. The FTT went on: “Whilst the Respondent's planning department wrongly maintained a position that the kitchen extension was unlawful the Appellants [Palmview] could not move forward and...
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