The Upper Tribunal (Lands Chamber) has overturned two penalties imposed by the London Borough of Croydon over fire safety inspections of private flats.
Judge Elizabeth Cooke sent back for re-hearings by the First Tier Tribunal the case of freeholder AA Homes & Housing and its managing agent Anabow Services.
Penalties were imposed on them for, respectively, controlling and managing premises unlicensed under a selective licensing scheme established by Part 3 of the Housing Act 2004.
AA Homes & Housing paid £11.7m for the freehold of the Natwest Tower, a former office block converted to 54 flats.
In September 2017 there was a priority referral to the council from the London Fire Brigade and 36 flats were found to be unlicensed.
London Fire Brigade found multiple serious fire safety failings and a waking watch was put in place
In February 2018 Croydon served notices of financial penalties of £26,000 and £12,000 respectively on AA Homes & Housing and Anabow Services.
When their initial appeals reached the FTT it reduced AA Homes & Housing to £20,000 but dismissed that of Anabow Services because it was “at the correct level of harm given the severity of the offence (particularly the harm or potential harm to the tenants)”.
Both appealed to the Upper Triibunal over the amounts of penalties still imposed.
In AA Homes & Housing Ltd & Anor v London Borough Of Croydon  UKUT 181 (LC) Judge Cooke granted the appeals because it was arguable that the FTT wrongly gave weight to the issue of the fire risk at the building, and erred in not applying its reasoning over reducing AA Homes’ penalty to that imposed on Anabow.
The judge said: “It is significant that [Croydon] does not suggest that any of the fire hazards could have been remedied by the grant of a licence, or was caused by the failure to licence, with the one exception of the tenant’s ignorance of the evacuation plan.”
She said the fire hazards were not caused by the failure to obtain a licence, and it was wrong for Croydon to take a “holistic approach” to matters of criminal liability.
“The starting point and the primary measure of the penalty must be the harm caused by this offence and not by another one which falls to be punished by a different process or under different provisions,” she said.
It was understandable that the FTT had been very concerned about the evidence of fire hazards “but it made a leap it should not have taken by making it a major factor in its assessment of harm” and this was “so far wrong as to amount to an error of law”.
She said the brevity of the FTT’s ruling made it impossible to understand its reasoning in leaving the penalty unchanged on Anabow Services.
“One has the impression that having reduced the penalty for the first appellant the FTT may have taken the view that the much lower penalty for the second appellant was acceptable, without analysis,” the judge said. “I take the view that there should have a separate reasoning process.”