Judges allow appeal by council over whether it fettered its discretion on financial penalties for housing offences
City of Bradford Metropolitan District Council’s policy on charges for Housing Act offences by landlords did not improperly fetter the council’s discretion over discounts and penalties, the Court of Appeal has found.
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Bradford won its case, overturning a ruling by the Upper Tribunal (Lands Chamber), but was criticised for having failed to be represented before that tribunal, which the appeal court found left the judge with an incomplete understanding of council policy.
The court accordingly ruled that Bradford could not recover its costs from defendant Hasan Kazi.
Lord Justice Birss said the case concerned civil penalties under s249A of the Housing Act 2004 imposed on Mr Kazi, a local landlord.
He owns a large four-storey house converted without planning permission into eight self-contained flats. It is classed a house in multiple occupation (HMO) because the conversion did not comply with building regulations.
A tenant complained to the council in June 2021 and environmental health officers inspected the property and served eight improvement notices on Mr Kazi.
They visited again in October 2021 and found only some of the required work had been done, and the council issued three notices of its intention to issue a financial penalty.
These were of £14,250 for each of two offences of failing, contrary to s30 of the Housing Act 2004, to comply with improvement notices, and £18,790.31 for failing to comply with regulations relating to HMOs, contrary to s234 of the 2004 Act.
Bradford determined the penalties by using its Private Sector Housing Enforcement Policy.
Mr Kazi appealed unsuccessfully to the FTT, which heard that Bradford used a matrix of harm and culpability to calculate penalties and the FTT identified the culpability aspect as high, and the risk of harm as medium.
Putting these together gave a starting point for each offence of £15,000. No aggravating factors were identified, but it was found in mitigation that Mr Kazi had cooperated and carried out some of the works. That led to a 5% discount, bringing the amount to £14,250.
The HMO penalty used the same matrix and because of Mr Kazi’s cooperation and that some poor conditions were caused by the tenants, two 5% discounts were applied bringing the amount to £13,500.
There was then a stage for a ‘final determinant’, which compares the sum determined with the cost of carrying out the works identified so as to remove any financial benefit for non-compliance.
This meant the FTT had arrived at the same penalties as had been imposed by the council.
Mr Kazi appealed to the Upper Tribunal, but Bradford did not appear, which the Court of Appeal said left Judge Elizabeth Cooke with an incomplete understanding of the policy.
Birss LJ said: “We asked the council's counsel, who was not instructed at the time, if there was a reason why that happened.
“There was no good reason for the non-attendance. The result was the judge was not assisted with adversarial argument on the meaning and effect of its policy. I believe that may explain what happened.”
Judge Cooke observed that she did not know what a particular sentence in the council's policy meant and held that the relevant part meant that for each aggravating or mitigating factor the penalty would be adjusted by 5% and by no other amount.
She said this rigid approach fettered the council's discretion and had no purpose. She also decided that the final determinant aspect was irrational and also unlawfully fettered the council's discretion.
Judge Cooke re-made the decision and decided that £10,000 would be the appropriate penalty.
Bradford appealed on three grounds: that the Upper Tribunal erred by allowing challenges to the council's policy in the context of an appeal against financial penalties; that it erred by construing the council's policy as containing an absolute limit on the amount by which a penalty may be adjusted; that Judge Cooke erred in reducing the penalties.
Birss LJ noted: “It is possible that the council's inexplicable non-attendance and the manner in which the quoted passage from the policy is laid out…might have contributed to the difficulty.”
Appeal judges were taken through the policy and concluded it “recognises that any policy is unlikely to take account of every situation, that each case needs to be considered on its merits and that the policy was to operate as a guide to council officers”.
Each aggravating or mitigating factor would normally see a 5% adjustment but could be worth more or less, it stated.
Birss LJ said: “I infer that the judge did not have the assistance we have had in this court on the policy as a whole, [it] does 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 does not have to be and all the circumstances are relevant.”
He said it followed that the FTT, in basing its approach on the policy, was not acting in error.
Lady Justice Elisabeth Laing and Lord Justice Peter Jackson both agreed with Birss LJ, with the latter saying: “The council is fortunate to have been allowed to bring a second appeal after it unaccountably failed to defend Mr Kazi's appeal in the UT in Leeds, depriving the judge of the assistance we received.
“Counsel was therefore wise to concede that, even if the appeal succeeded, the council should not recover its costs from Mr Kazi. In allowing the appeal on the basis identified by Birss LJ, we will make no order for costs.”
Mark Smulian
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