Property owners fail in challenge to refusal by tribunal to hear appeal over financial penalties for unlicensed HMOs

The Upper Tribunal has rejected an appeal by two property owners over the First-Tier Tribunal’s refusal to consider an appeal brought out of time against financial penalties imposed on them by a London borough for running unlicensed houses in multiple occupation (HMOs).

The First-tier Tribunal (Property Chamber) had decided on 13 December 2018 to decline to consider an appeal by Mr Adil Haziri and Mr Fatjon Qela against the penalties imposed on them by the London Borough of Havering under section 249A, Housing Act 2004.

Mr Haziri and Mr Qela were given final notice of the penalties on 14 September 2018. The FTT’s reason for refusing to consider the appeal was that the appeals had been received by it on 22 October 2018, which was more than 28 days after the date on which final notice had been given, and no good reason had been shown why an extension of time should be allowed.

The appellants were the leasehold owners of a semi-detached property in Romford. The property was reported to comprise a ground floor shop from which a car wash business is operated by the appellants, together with a separate ground floor residential unit and a further self-contained flat on the upper floor.

The property is in an area which was designated by Havering as subject to additional licensing under Section 56, Housing Act 2004 on 1 March 2018.

On 30 May 2018 the authority inspected the property and concluded that both residential units were operated as HMOs. Since neither was licensed, the authority concluded that the appellants had committed offences, contrary to section 72 of the 2004 Act, of being persons having control of or managing an HMO which is required to be licensed but which is not so licensed.

Havering also identified circumstances which it considered to constitute breaches of the Management of Houses in Multiple Occupation (England) Regulations 2006 and which therefore amounted to offences under section 234 of the 2004 Act.

On 18 June 2018 the council gave each of the appellants notice of its proposal to impose financial penalties of £8,000 on each of them.

The appellants made representations to Havering, explaining that they had acquired the lease of the property in June 2016. They said that at that time the residential parts of the building were already let and they did not appreciate that they were HMOs, thinking instead that those in occupation comprised a single household. 

They also said that the property had been managed for them by an agent and they had been unaware until the authority’s inspection on 30 May 2018 that a licence was required. They said they intended to apply for a licence and carry out the necessary works to comply with all relevant regulations. Reference was also made to the fact that Mr Qela had been injured in an accident and spent time abroad receiving medical treatment.

However, Havering did not change its mind and on 14 September 2018 it sent final notices to the appellants imposing penalties of £8,000 on each of them. These notices informed the appellants that any appeal should be made to the FTT within 28 days and provided its address.

In Haziri v London Borough of Havering (HOUSING – CIVIL PENALTY) [2019] UKUT 330 (LC) the Upper Tribunal’s Deputy Chamber President, Martin Rodger QC, said he had “no reason to doubt that”.

Discussions then took place between Havering and the appellant’s solicitors about the possibility of them paying the penalties by instalments. The authority provided a draft agreement to that effect, but on 12 October, after the end of normal business hours, the solicitors informed the authority by email that they were now instructed to file an appeal against the penalties with the FTT.  On 18 October that email was acknowledged by a member of the authority’s staff whose only comment was that the contents of the email were noted.

Judge Rodger noted that paragraph 10 of Schedule 13A, 2004 Act makes provision for appeals to the FTT. None of those provisions say anything about the time within which an appeal must be brought, he said.

However, he noted that the Upper Tribunal (Judge Cooke) had recently confirmed in Pearson v City of Bradford Metropolitan District Council [2019] UKUT 291 (LC) that the omission of the 2004 Act to provide a time limit for the bringing of an appeal against a financial penalty was cured by the FTT’s own procedural rules. 

Proceedings before the FTT are commenced by sending or delivering a notice of application to the tribunal. Rule 27 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 provides as follows:

“27-(1) This rule applies where no time limit for starting proceedings is prescribed by or under another enactment.

(2) Where the notice of application relates to a right to appeal from any decision (including any notice, order or licence), the applicant must provide the notice of application to the tribunal within 28 days after the date on which notice of the decision to which the appeal relates was sent to the applicant.”

Judge Rodger said: “As the final notices in this case were sent to the appellants on 14 September 2018 the last day for providing a notice of application bringing an appeal was 12 October 2018, 28 days later. That was the date on which the appellant’s solicitors informed the authority of their intention to file an appeal, but no such appeal was in fact filed at the FTT until 10 days later, on 22 October.”

On 23 October the appellants’ notice of application was considered by a procedural judge who gave directions recording that the appeals were out of time and requiring the appellants to provide a statement in support of any request for an extension of time by a specified date. 

On 9 November, within the time permitted by the procedural judge, the appellants filed a statement of case which included their reasons for requesting an extension of time. The first of those reasons was as follows:

“The appellants were late in responding to the Council’s Notice due to a number of compulsions because of the pressing circumstances beyond their control as explained in their initial representations. The appellants decided to appeal after taking detailed formal legal advice and finding good grounds to appeal and the respondent was notified of their intention to appeal together with the grounds. The appellants and their legal representative therefore had good reason to believe that they had the implied consent of the respondent for a late application.”

The second ground on which the appellants explained their delay was this:

“The applicants were under the impression that the 28 days time limit for an appeal started after they exhausted the option of an informal internal review.  They requested a reconsideration of the penalty notice and the respondent, after due consideration, declined their request for any deduction in the amount of the penalty but offered a monthly payment arrangement for the penalty to be paid in one year in a letter dated 19 September 2018.  The appellants did not find that a financially viable option nevertheless they never accepted the liability.  After reconsidering their financial circumstances, grounds of appeal and taking further legal advice they decided to appeal instead of compliance with the penalty notice which they found financially an impracticable option anyway.”

In its decision of 13 September 2018 the FTT exercised its discretion, finding that there was “no basis for extending the time limit in this particular case for the following reasons: (1) there was no evidence of implied consent; the applicants had the benefit of legal advice since before the final notices were served.”

Mr Haziri and Mr Qela appealed, emphasising their view that the properties were not HMOs at all but were occupied by single households. Their solicitor also stressed the financial burden on the appellants of the significant penalties imposed on them.

Rejecting the appeal, Judge Rodger said: “Both of those matters would have been highly relevant had the applicants brought their appeal in time, but when it comes to determining questions of case management, and in appeals from case management decisions, the proper focus is not on the underlying merits of the dispute…..

“This is not a case in which the FTT could have formed any view on the merits of the proposed appeal. The question whether the property was an HMO depended on facts which were not provided. The authority had formed the view, on its inspection, that the individuals occupying the property were doing so as separate households. There was no material on which the FTT could have formed any view on that issue. It was therefore correct to give no weight to the suggestion that the appeal had a strong prospect of success.”

The judge rejected the appellants’ argument that the delay in the case was short. “The significance of a period of delay is, to some extent, relative to the period which is allowed for performance. A delay of 10 days in doing something which is required to be done in 28 days is capable of being regarded as significant. That is a matter of assessment for the FTT.”

Judge Rodger also found that the FTT had been “plainly correct” to reject the suggestion that the authority had consented to the delay.        

He added: “The FTT was also entitled to place considerable weight on the fact that the appellants had been professionally represented, by a firm of solicitors, since before the service of the final notice imposing the penalty. No information was provided to the FTT to suggest that communication between the appellants and their advisers was not timely, or that there had been any reason why the solicitors were not able to provide proper advice or comply with their clients’ instructions.”

No proper information had been provided to the FTT which would have allowed it to form any conclusion on the reasons for the delay, the Upper Tribunal judge said. “No details were provided of any request for an informal review (and none seems to have been made). Unsubstantiated and general references to ‘a number of compulsions’ and ‘pressing circumstances beyond their control’ were wholly inadequate for the purpose of providing an explanation. The details of the circumstances were said to be in the solicitors’ initial representations, but those had been prepared before the service of the final notices and could not explain a subsequent delay in filing an appeal against those notices.”

Judge Rodger concluded: “Given the lack of any proper explanation for a delay of as long as 10 days, the FTT was entitled to refuse to exercise its discretion in the appellants favour. It is impossible to suggest that its decision was not one which was properly open to it. The appeal is therefore dismissed.”