Redefining the boundaries of reasonable excuse in housing enforcement?

A recent Upper Tribunal decision involving a city council has significant implications for local housing authorities and landlords alike, writes Mikhail Charles.

The case of in Naila Tabassam v Manchester City Council [2024] UKUT 93 (LC) concerned the scope of the "reasonable excuse" defence to the offence of failing to comply with an improvement notice under the Housing Act 2004. The Tribunal's findings underscore the importance of effective service of notices and raise questions about the limits of relying on the address for service at HM Land Registry.

Facts and Issues

Mrs Tabassam, the landlord of a property in Manchester, appealed against a financial penalty imposed by the First-tier Tribunal (FTT) for failing to comply with an improvement notice. The notice had been served by the Council at her address on the Land Register, but Mrs Tabassam claimed she never received it. The Council had her up-to-date correspondence address in its Council Tax records but did not use this for service.

The key issues before the Upper Tribunal were:

(1) Whether the improvement notice was validly served; and

(2) Whether Mrs Tabassam had a "reasonable excuse" for non-compliance.

Decision and Reasoning

The Upper Tribunal's decision in Tabassam hinged on two key issues: (1) the validity of service of the improvement notice; and (2) the availability of the "reasonable excuse" defence under s.30(5) of the Housing Act 2004.

On the first issue, the Tribunal applied the Court of Appeal's judgment in Oldham Metropolitan Borough Council v Tanna [2017] EWCA Civ 50. In Tanna, Lewison LJ held that where a local authority wishes to serve a notice on the owner of a registered property, its duty to make reasonable inquiries is normally satisfied by searching the proprietorship register to ascertain the owner's address. It is then the owner's responsibility to keep this address updated. Applying this principle, the Upper Tribunal in Tabassam found that the Council had validly served the improvement notice by sending it to Mrs Tabassam's address on the Land Register, even though she no longer resided there.

However, the Tribunal departed from Tanna on the second issue of reasonable excuse. In Tanna, the Court of Appeal suggested (obiter) that a landlord's failure to update their registered address could not amount to a reasonable excuse for non-compliance with a notice. The court reasoned that allowing such an excuse would enable landlords to evade their responsibilities by deliberately failing to update their details.

In Tabassam, the Upper Tribunal took a more nuanced view. It held that while valid service at the registered address is sufficient to establish the offence, it does not necessarily preclude a reasonable excuse defence. The Tribunal emphasized that each case must be assessed on its particular facts to determine whether the landlord's non-compliance was objectively reasonable.

On the facts of Tabassam, several key factors swayed the Tribunal's analysis:

1. The First-tier Tribunal had accepted Mrs Tabassam's evidence that she did not receive the notice and was unaware of its contents. This was not a case of deliberate evasion. 
2. Mrs Tabassam had not "disappeared" - she was readily traceable via her up-to-date entry on the Council's tax records.
3. Mrs Tabassam's failure to update her Land Registry address was, in the Tribunal's view, a technical error that an average person could easily overlook. It was not a deliberate or reckless breach.
4. Once Mrs Tabassam became aware of the issues at the property, she took prompt remedial action to rectify them. This suggested an absence of culpability.

Weighing these factors, the Upper Tribunal concluded that it would be "exceptionally harsh" to hold Mrs Tabassam criminally liable in these circumstances.

The Tribunal stressed that the "reasonable excuse" provision is intended to provide a safety valve against injustice in appropriate cases. It is not a charter for errant landlords to evade their responsibilities.

To support this conclusion, the Upper Tribunal drew an analogy with the First-tier Tribunal's approach to the reasonable excuse defence in Perrin v HMRC [2018] UKUT 156 (TCC). In that case, the FTT held that ignorance of the law can sometimes amount to a reasonable excuse for non-compliance, depending on how objectively reasonable it was for the particular taxpayer not to know of the requirement in the circumstances.

Applying similar reasoning, the Upper Tribunal in Tabassam found that Mrs Tabassam's ignorance of the need to update her Land Registry address was objectively reasonable in her case.

The Tribunal was careful to distinguish Tabassam from cases involving offences of failing to obtain HMO licences, such as IR Management Services Ltd v Salford City Council [2020] UKUT 81 (LC). The Tribunal noted that HMO landlords are expected to have a higher level of knowledge and diligence regarding their legal obligations. By contrast, Mrs Tabassam was not an HMO landlord and could not be held to the same standard.

Importantly, the Upper Tribunal rejected the Council's argument that allowing a reasonable excuse defence on these facts would undermine the enforceability of improvement notices.

The Tribunal observed that local authorities and tribunals are well-placed to differentiate between landlords who are genuinely ignorant and those who are deliberately obstructive. The reasonable excuse defence will only succeed in the former category of cases.

Overall, the Upper Tribunal's reasoning in Tabassam can be understood as an effort to strike a fair balance between the need for effective housing enforcement and the need to avoid disproportionate penalties on landlords. The judgment does not dilute the principles of deemed service established in Tanna, but it recognizes that actual knowledge (or the lack thereof) is a relevant consideration in the reasonable excuse analysis. By adopting a fact-sensitive approach, the Tribunal sought to inject an element of flexibility and discretion into the housing enforcement regime.

It is important to note that Tabassam does not give landlords a free pass to ignore improvement notices. The Tribunal was at pains to stress that reasonable excuse will not assist landlords who deliberately fail to update their addresses or take steps to avoid receiving notices. The decision is confined to cases where the landlord's non-compliance was the result of a genuine and understandable error, and where the authority had straightforward means of contacting them.

In conclusion, the Upper Tribunal's reasoning in Tabassam represents a nuanced development of the law on reasonable excuse in the housing enforcement context. The decision affirms the validity of deemed service at the Land Registry address but recognizes that this does not automatically exclude the reasonable excuse defence. By focusing on the landlord's actual knowledge and conduct, the Tribunal sought to achieve a just outcome on the particular facts while upholding the overall integrity of the enforcement regime. The judgment strikes a delicate balance between the competing principles of certainty and fairness.

Mikhail Charles is a barrister at Five Pump Court Chambers.