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Upper Tribunal remits appeal over £70k financial penalties imposed by First-tier Tribunal for HMO offences after criticising absence of reasoning

An Upper Tribunal judge has remitted a landlord’s appeal over the level of financial penalties imposed for offences in relation to houses in multiple occupation (HMOs), after finding the First-tier Tribunal’s decision for requiring her to pay more than £70,000 to be “bereft of reasoning”.

In Dorval v Tendring District Council (HOUSING - CIVIL PENALTY - emergency prohibition notices) [2022] UKUT 44 (LC) Tendring District Council had imposed financial penalties on Mrs Dorval, the appellant, in respect of ten offences of failing to meet the requirements of the Management of Houses in Multiple Occupation (England) Regulations 2006 for two houses in Clacton-on-Sea for which she held an HMO licence.

Mrs Dorval and her husband are joint registered proprietors of one of the properties, and Mr Dorval is the freeholder of the other.

In 2017 Mrs Dorval applied for and obtained HMO licences for these adjacent houses; the licence for one permitted up to eight occupants and that for the other permitted up to six. In 2018 Mrs Dorval appointed managing agents to look after both properties.

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In the course of 2019 officers of the respondent local housing authority visited on a number of occasions, and sent Mrs Dorval schedules of work that needed to be done. The police also visited following complaints about anti-social behaviour by the tenants.

On 12 August 2019 both houses were closed following service of Emergency Prohibition Orders under section 43 of the Housing Act 2004.

Tendring subsequently imposed financial penalties on Mrs Dorval, amounting to £90,000 altogether, on the basis that she had committed five separate offences in respect of each property. Mrs Dorval appealed the final financial penalty notices to the FTT.

The FTT said that it was satisfied beyond reasonable doubt that Mrs Dorval had committed all the offences alleged, although a few instances of breaches of regulations 7 and 8 were found not to have been proven.

The First-tier Tribunal explained that the council had a policy which ranked each breach on a scale of culpability from 1 to 5, and on a scale of harm in three categories; the scores were put together in a table which yields a further number and a penalty range. “By way of illustration”, said the FTT at paragraph 56, “a very high severity/culpability score, when combined with a category 1 harm score, will result in a numerical score of 6, leading to a penalty range of £17,000 to £30,000”, with the decision-maker having a discretion within that range.

That was all the FTT said about the policy, Judge Cooke said. “It did not indicate what the different levels of culpability were, nor what the levels of harm were; the respondent’s policy provides a verbal description of each…..None of these descriptions is mentioned in the FTT’s decision.”

The FTT then set out in tabular form its assessment of culpability, harm, numerical score, penalty range and penalty imposed for each offence, before imposing a final total penalty of £70,500.

Upper Tribunal Judge Elizabeth Cooke found the FTT’s decision about the level of the penalties to be “bereft of reasoning”.

She said: “Having stated that it would follow the respondent’s policy, it gave only the sketchiest description of that policy. It then set out, without explanation, the level of culpability and harm for each offence, in tabular form. The basis of those assessments remains a mystery, and the FTT’s later explanation of them as ‘based on its experience and knowledge as an expert Tribunal’ adds nothing.”

The FTT’s decision as to the level of the penalties for each of the offences that it found had been committed was therefore set aside.

Judge Cooke said she had given careful consideration to whether she could substitute the Upper Tribunal’s own decision about the appropriate level of penalty. However, she said she could not do so because a re-hearing had not been possible and she did not have access to the whole of the evidence that was before the FTT – much or perhaps most of which appeared to have been given orally at the hearing.

The judge said Mrs Dorval’s appeal to the FTT from the financial penalty notices should be remitted to the FTT insofar as it relates to the level of the penalties; the FTT’s finding that she committed the ten offences had not been appealed and was not set aside.

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