Among several recent precedents handed down by the Upper Tribunal and Court of Appeal in the last five weeks, none is as impactful as Leicester CC v Morjaria.
To be clear, as it stands, most local authority Financial Penalty policies will now either be defective or be strongly arguable as defective. The distinction is perhaps less relevant than one might think, as the effect on increasing appeal rates will drain precious resources from stretched PRS enforcement teams.
What does Morjaria say is a compliant Financial Penalty framework?
The critical content is contained within paragraph 55:
“…in principle it would seem to me that a better approach would be for the seriousness of each relevant housing offence to be reflected in either a starting level or in a maximum (and possibly a minimum) penalty. Around that starting point or within that range the actual or potential harm to tenants, the culpability of the offender and any mitigation could then be taken into account to determine the appropriate penalty for the particular offence being considered. That might require a different grid to be devised to reflect different offences, but it might avoid some of the difficulties identified in this case.”
So a compliant approach would appear to be:
- Step 1 – rank the seriousness of offences and give a starting point for each offence in isolation
- Step 2 – consider the culpability in isolation and harm in isolation via a scoring matrix
- Step 3 – consider aggravating and mitigating factors
There would then need to be a consideration of the Totality Principle, consideration of any exceptional circumstances, and a review of whether the aims of the Financial Penalty policy are being met.
The Upper Tribunal is clear that:
“It is for each local housing authority to adopt its own policy, and it is not the function of this Tribunal provide a model.”
However, there is a strong inference that any policy that does not follow this approach would be defective. It is a certainty that many landlords and their legal representatives will advance this argument. This argument would be compelling to many FTT panels.
Note that there is no need to include other central government guidance factors, such as deterring the offender, or deterring others from committing similar offences in a scoring matrix. This lack of inclusion of other factors listed in government guidance has always seemed like the sensible approach, the other factors detailed in government guidance should be addressed via the wording of the Civil Penalty policy and the outcomes that the policy leads to; for example, the deterrent effect on others is in large part determined by the degree to which the local authority publicises the Financial Penalties, which should be reflected in the body of the CPN policy rather than a scoring matrix.
Benefits of the Morjaria framework
Financial Penalty policies must ensure proportionality, transparency and consistency. The Morjaria framework is a step-by-step approach that is (relatively) easy to apply and will no doubt lead to high levels of consistency and transparency – critical goals of Civil Penalty policies. The lived realities of local authority enforcement mean that this framework can be a real benefit.
Many local authorities do not carry out Financial Penalties due to a lack of resource and their perceived complexity. With the s.58 Renters Reform Bill statutory duties likely to come in early next year, every local authority must embrace Financial Penalties – anything that enables Financial Penalties to be carried out fairly and transparently benefits society.
Concerns about the Morjaria framework
There are two areas of concern; neither need be fatal, though it can be tempting to view the problems below as antithetical to the Morjaria framework.
Some offences can have wildly varying seriousness
Whilst this can apply to Management Reg breaches, perhaps the clearest breaches that don’t slot into the Morjaria framework are:
- s.95(2)(b) Housing Act 2004 – breach of Selective licence conditions
- s.72(3)(b) Housing Act 2004 – breach of HMO licence conditions
Many local authority licensing conditions require a landlord to have fire alarms and keep the property free from pests. The same scheme conditions often compel the landlord to give written instructions regarding how to dispose of bulky waste. Failure to comply with any of these licence conditions is the same legislative breach. These are patently not the same level of seriousness. It may be that the path to navigate here is to clarify within the body of the policy that offences relating to breach of licence conditions do not lend themselves to a standardised starting point and, therefore, would be considered on a case-by-case basis concerning seriousness.
What regard must be given to sentencing guidelines?
Many criminal offences have specific sentencing guidelines. There are guidelines from the sentencing council that covers offences for which there are no specific guidelines.
These guidelines seem to me to make it clear that seriousness is an exercise of combining the following factors in one fell swoop:
- The maximum sentence when prosecuted
- The culpability of the offender
- The harm
The maximum sentence for most of the offences for which Civil Penalties can be brought is the same (with breaching a Banning Order being the significant exception). This lack of stratification of seriousness based on maximum penalty upon prosecution would mean that seriousness, according to these sentencing guidelines, is reached by considering only the harm and culpability rather than being a separate element considered in isolation based on the offence committed.
It is unclear to me (and perhaps everyone) how bound the Tribunal is by sentencing guidelines– it could be argued that as the Tribunals are carrying out a (slightly limited) de novo hearing, they are passing a sentence and therefore are bound by sentencing guidelines. This interpretation sits uneasily alongside Morjaria.
It could be argued that the existence of central government guidance means there is no requirement for strict adherence to the sentencing guidelines, as such guidance is usually lacking where general sentencing guidelines are used for other offences.
It could be argued that there is nothing inconsistent between the sentencing guidelines, the government Civil Penalty guidelines and the Morjaria framework.
If the sentencing guidelines have primacy, it may follow that failure to obtain a selective licence does not intrinsically create any harm; it is the conditions within the property that relate to the actual or potential harm. However, there can be no Financial Penalties for breach of selective licence conditions if a property is unlicensed, as the requirement to comply with the licence conditions is only imposed upon the granting of a selective licence.
An unintended consequence of granting primacy to sentencing guidelines may be that it becomes nigh-on impossible to regulate areas under a selective licensing designation effectively. Considering the PRS conditions that must be present for approval of a selective licensing designation application by the Secretary of State, anything that impedes effective regulation of selectively licensed areas will undoubtedly lead to worse outcomes for the most vulnerable, socially disadvantaged PRS tenants, undermining the purpose of the schemes’ implementation and the general push to raise housing standards.
However, as we have seen from our Rakusen v Jepsen case in the UK Supreme Court, it does not matter if the black letter interpretation of the legislation undermines the purpose of the legislation; the judiciary cannot look past the words on the page in front of them, even if such an interpretation will lead to a loss of life and worse health outcomes for many.
What should local authorities do?
A policy compliant with the Morjaria framework is currently the safest place to be. Justice For Tenants, with the encouragement of the ACEHO, has been working on a model Civil Penalty policy based on government guidance, the crown code for prosecutors, sentencing guidelines and the 53 precedents we have identified as impacting Financial Penalty procedural matters.
This model policy will be helpful as a tool for consulting on policies with our local authority colleagues, using the £455,000 first tranche of funding from the charity Impact on Urban Health so that each local authority can build a policy that both supports their enforcement work and is tailored towards local needs and priorities.
There is one thing I do not doubt, and I have seen happen concerning Rent Repayment Orders over the last six years; new precedents will be set, and local authorities will need to adapt to the evolving and shifting case law to ensure their Financial Penalty policies and processes work effectively and efficiently.
Local authorities who have delegated authority to amend their Civil Penalty policies (either to a specific member or Service Director) will be advantaged compared to those who need full member approval for amendments or new versions.
Justice For Tenants has received funding from the charity Impact on Urban Health to support local authorities with Financial Penalties, offering funded services including:
- Policy, process and template work
- Training
- Evidence submission in the Tribunals
- Representation in the Tribunals
- Capacity expansion – drafting and reviewing Notices
In addition, there are further free services to recover public funds (Universal Credit and Housing Benefit) via Rent Repayment Orders. These funds are ringfenced to fund local authority PRS enforcement work, require no local authority resources or input, support tenants, and reduce Financial Penalty appeal rates. You can find out more at https://www.justicefortenants.org/local-authorities/
If you would like to share your perspective, enquire about any funded services, or chat, please get in touch with JFTs Local Authority Outreach Lead Al Mcclenahan at amcclenahan@justicefortenants.org.