Adil Catering Ltd v The City Of Westminster Council (HOUSING - CIVIL PENALTY - house in multiple occupation - manager's duties) -[2022] UKUT 238 (LC)- (02 September 2022)

Key Facts

Issues

• The first issue concerned whether the Council's evidence established breaches of the Management Regulations. The FTT held that defects present at inspection time constituted breaches under strict liability, as per the precedent in I R Management Services Limited v Salford City Council [2020] UKUT 81 (LC). The appellant argued that a single instance of obstruction or defect should not amount to a breach, but the FTT rejected this, emphasizing that the duty to 'ensure' compliance required achieving specific outcomes, not just processes.
• The third issue focused on the penalty's fairness. The FTT reduced the £5,000 penalty for defective lighting by 25% (to £3,750) but refused to reduce the £12,000 fire safety penalty. It reasoned that fire safety breaches were more severe and that the appellant's history of unresolved defects (e.g., faulty fire alarms for eight months, condemned extinguishers since 2019) negated any credit for early remediation. The Council's policy was deemed advisory, and the FTT's discretion in penalty assessment was upheld as lawful.
• The second issue addressed the appellant's reasonable excuse defence. The FTT rejected the argument that lack of notice, contractor reports of resolved issues, and pandemic-related operational challenges constituted a valid defence. It emphasized the manager's duty to proactively ensure safety standards, noting the appellant's failure to conduct regular inspections and the ineffectiveness of remedial actions (e.g., fire alarm faults persisted for months). The Court of Appeal in Palmview Estates Limited v Thurrock Council [2021] EWCA Civ 1871 was cited to support the broad interpretation of the defence requiring objective justification for the prohibited activity.

Holdings

• The FTT determined that the existence of defects at the time of inspection was sufficient to prove breaches of the Management Regulations under a strict liability standard, as the duty to 'ensure' safety measures required achieving specific outcomes, not just implementing processes.
• The FTT upheld the Council's penalty of £12,000 for fire safety breaches but reduced the £5,000 penalty for defective lighting by 25% to £3,750, deeming the latter less severe.
• The FTT rejected the appellant's reasonable excuse defence, concluding that the pandemic, lack of notice, and reliance on contractors did not justify the failure to address persistent defects in fire safety and lighting.
• The appeal was ultimately dismissed, with the FTT affirming its legal reasoning on breaches, reasonable excuse, and penalty quantum.

Remedies

• The Upper Tribunal reduced the £5,000 financial penalty for defective lighting in common areas by 25% to £3,750. This reduction was granted as the FTT considered lighting issues less concerning than fire safety breaches, though no further justification for this distinction was provided.
• The Upper Tribunal confirmed the £12,000 financial penalty for breaches of fire safety regulations (Regulation 4), rejecting the appellant's arguments for reduction. The FTT found the breaches to be serious and unaddressed despite prior warnings and remediation attempts.

Monetary Damages

Legal Principles

• The offense of failing to comply with the Management Regulations is one of strict liability, subject only to the statutory defense of reasonable excuse. The Tribunal emphasized that defects existing at the time of inspection constitute a breach unless the appellant can demonstrate a reasonable excuse, regardless of whether the defects were newly arisen or previously addressed.
• The Tribunal applied a purposive interpretation to the statutory duty to 'ensure' safety measures and repairs under the Management Regulations, concluding that it requires achieving specific outcomes (e.g., unobstructed escape routes, functional fire alarms) rather than merely implementing management processes. This contrasts with the appellant's argument that 'ensure' should be interpreted as a duty to take reasonable steps without guaranteeing outcomes.

Precedent Name

• Palmview Estates Limited v Thurrock Council
• D'Costa v D'Andrea
• Sheffield City Council v Hussain
• Reliance Permanent Building Society v Harwood-Stamper
• I R Management Services Limited v Salford City Council

Cited Statute

• Housing Act 2004
• Management of Houses in Multiple Occupation (England) Regulations 2006

Judge Name

Passage Text

• The duty to ensure that means of escape are kept free from obstruction and maintained in good order is performed if the means of escape are not obstructed or in disrepair, and it is breached if they are. Similarly, a duty to ensure that adequate light fittings are available for use at all times by every occupier has been performed if the light fittings are adequate and is breached if they are not.
• The FTT directed itself by reference to the decision of this Tribunal in I R Management Services Limited v Salford City Council [2020] UKUT 81 (LC), at [27], that 'the offence of failing to comply with the relevant regulation is one of strict liability, subject only to the statutory defence.' Thus, it decided that if relevant defects existed at the time of the inspection, a breach of the Management Regulations would have occurred and, unless the appellant had a reasonable excuse, an offence would have been committed.
• The FTT dismissed all of these excuses ... because it had failed to take proper steps to inform itself. No inspection of the property took place between the end of March (at the latest) and 8 June when an electrician attended. ... In those circumstances the FTT was entitled to find that the appellant's ignorance of the defects was not a reasonable excuse.