On 24 October 2019, the Deputy Chamber President of the Upper Tribunal (Lands Chamber) (UT), Martin Rodger QC, handed down judgment in Haziri and Qela v LB Havering [2019] UKUT 0330 (LC), dismissing an appeal against a decision of the First-tier Tribunal (Property Chamber) (FTT) refusing to consider an appeal against financial penalties imposed on Adil Haziri and Fatjon Qela (AAs) by the London Borough of Havering (H) under section 249A of the Housing Act 2004 (HA 2004), on the basis that the appeal had been received out of time, and no good reason had been shown why an extension of time should be allowed.

Background

The AAs are the leaseholders of a property (the Property), comprising of a ground floor shop from which they operate a carwash business, together with a separate ground floor residential unit and a further self-contained flat on the upper floor. The Property is in an area which was designated by H on 1 March 2018 as being subject to additional licensing under section 56 of the HA 2004. On 30 May 2018, H inspected the Property and concluded that both residential units were being operated as HMOs, and subject to licensing pursuant to section 61 of the HA 2004. As neither unit was licensed in accordance with the legislation at the time, H concluded that the AAs were, beyond reasonable doubt, persons having control of or managing a HMO which is required to be licensed but is not, which were offences contrary to section 72 of the HA 2004. H also identified circumstances which it considered, beyond reasonable doubt, constituted breaches by AAs of the Management of Houses in Multiple Occupation (England) Regulations 2006 (SI 2006/372) and therefore amounted to offences under section 234 of the HA 2004. Accordingly, on 18 June 2018, H gave each of the AAs notice of their proposal to impose financial penalties of £8,000 on each of them, pursuant to section 249A of the HA 2004. The notices of intent informed the AAs of their right to make representations about the proposal.

The AAs’ solicitors made representations, explaining that they had acquired the lease of the Property in June 2016, with the residential tenants in situ, and had not appreciated that the flats were HMOs, thinking instead that those in occupation comprised a single household. Further, as AAs’ solicitors explained, the Property had been managed for the AAs by an agent and they had been unaware, until H’s inspection on 30 May 2018, that a licence was required. They now intended to apply for a licence and carry out the necessary works to comply with all relevant regulations. Reference was also made to the fact that Mr Qela had been injured in an accident and spent time abroad receiving medical treatment.

H were not persuaded by these representations and, on 14 September 2018, sent final notices by registered post to the AAs imposing penalties of £8,000 on each of them, with copies to their solicitors by email. The notices, the form of which is not prescribed, included information about the AAs’ rights of appeal against the financial penalties as required by paragraph 8 of Schedule 13A to the HA 2004, pointing out that any appeal should be made to the FTT within 28 days and providing its address.

Discussions then took place between H and AAs’ solicitors about the possibility of the penalties being paid by instalments and H provided a draft agreement to that effect. On 12 October 2018, the last day for providing a notice of application bringing an appeal (but after the end of normal business hours), AAs’ solicitors informed H that they were now instructed to file an appeal against the penalties with the FTT. On 18 October 2018, that email was acknowledged by a member of H’s staff, whose only comment was that the contents of the email were noted.

In fact, no appeal was filed at the FTT until 22 October 2018 (that is, ten days after the expiry of the time to appeal set out in the final notices) and on 23 October, a procedural judge gave directions recording that the appeals were out of time and requiring the AAs to provide a statement in support of any request for an extension of time. The time limit for appealing to the FTT against a financial penalty Paragraph 10 of Schedule 13A to the HA 2004 makes provision for appeals to the FTT, but does not specify a time period.

In Pearson v City of Bradford Metropolitan District Council [2019] UKUT 291 (LC), however, the UT confirmed that the omission from the HA 2004, of a time limit for the bringing of an appeal against a financial penalty, is cured by the FTT’s own procedural rules. Rule 27 of the Tribunal Procedure (First-tier Tribunal) (Property Chamber) Rules 2013 (the Rules) provides:

“(1) This rule applies where no time limit for starting proceedings is prescribed by or under another enactment.

(2) Where the notice of application relates to a right to appeal from any decision (including any notice, order or licence), the applicant must provide the notice of application to the tribunal within 28 days after the date on which notice of the decision to which the appeal relates was sent to the applicant.”

By rule 6(3)(a) of the Rules, the FTT is given a specific discretionary power to extend the time for complying with any rule, practice direction or direction, even if the application for an extension is not made until after the time limit has expired. The appeal to the FTT

On 9 November 2018, within the time permitted by the procedural judge, the AAs filed a statement of case giving reasons for requesting an extension of time. In essence, they said they were late in responding to H’s notice due to : “…a number of compulsions because of the pressing circumstances beyond their control…The appellants decided to appeal after taking detailed formal legal advice and finding good grounds to appeal and the respondent was notified of their intention to appeal together with the grounds… The appellants and their legal representatives therefore had good reason to believe that they had the implied consent of the respondent for a late application”. They further stated that they: “…were under the impression that the 28 days time limit for an appeal started after they exhausted the option of an informal internal review. They requested a reconsideration of the penalty notice and the respondent … declined their request for any deduction in the amount of the penalty but offered a monthly payment arrangement for the penalty to be paid in one year in a letter dated 19 September 2018. The appellants did not find that a financially viable option nevertheless they never accepted the liability. After reconsidering their financial circumstances, grounds of appeal and taking further legal advice they decided to appeal instead of compliance with the penalty notice which they found financially an impracticable option anyway.”

The decision of the FTT

In exercising its discretion, the FTT determined: “…that there is no basis for extending the time limit in this particular case for the following reasons:

(1) there is no evidence of implied consent; (2) the applicants had the benefit of legal advice since before the final notices were served …”

Appeals to the UT against case management decisions

The UT was clear that it would not interfere with discretionary case management decisions where the FTT had applied correct principles and taken into account matters which should be taken into account and not taken into account irrelevant matters, unless the decision was so plainly wrong as to be outside the generous ambit of the FTT’s discretion. It would not suffice that the appellate tribunal itself would have made a different decision; the decision being appealed must have been such that it could not be justified. Although the Civil Procedure Rules do not apply to tribunals, the UT emphasised that tribunals should follow a similar approach to procedural non-compliance and relief against sanctions (see BPP Holdings v Commissioners for Her Majesty’s Revenue and Customs [2017] UKSC 55), and made reference to the three- stage approach in Denton v T H White Limited [2004] EWCA Civ 906: to:

  • Identify and assess the seriousness of the failure to comply.
  • Consider why the default occurred.
  • Evaluate all the circumstances of the case to enable the court to deal justly with the application, including the need for litigation to be conducted efficiently and the need to enforce compliance with rules, practice directions and orders.

And, much as Lewison LJ had said in Mannion v Ginty [2012] EWCA Civ 1667 at paragraph 18 that it was “vital for the Court of Appeal to uphold robust fair case management decisions made by first instance judges”, the UT considered that it was equally vital in the interests of all tribunal users for it to uphold robust fair case management decisions by FTT judges.

The appeal

Prospects of success

In their grounds of appeal, the AAs sought to argue, as they had done in the FTT, that the properties were not HMOs at all but were occupied by single households. The AAs also emphasised the financial burden on the appellants of the significant penalties imposed on them. The UT was clear that although those matters would have been highly relevant to an appeal brought in time, in determining questions of case management, and appeals from case management decisions, the proper focus is not on the underlying merits of the dispute. Indeed, save where a party’s case was so strong it would entitle them to summary judgment without a trial because “the court could be quickly persuaded that the outcome was clear”, the “strength of a party’s case on the ultimate merits of the proceedings is generally irrelevant when it comes to case management issues” (Global Torch Ltd v Apex Global Management Ltd (No 2) [2014] UKSC 64, per Lord Neuberger at paragraph 29). In the instant case, it could not even have been asserted that the appeal had a strong prospect of success, because the finding by H that the Property was a HMO depended on facts which were simply not before the FTT. There was no material on which the FTT could have formed any view on the appeal’s prospects of success.

Delay

The UT pointed out that the significance of a period of delay is, to some extent, relative to the period which is allowed for performance. Thus, a delay of ten days in doing something which is required to be done in 28 days is capable of being regarded as significant. That said, it was a matter of assessment for the FTT. In accepting the FTT’s decision to reject any argument that H had consented to the delay, the UT pointed out that:

  • There was no evidence to support the contention.
  • There was no objective justification for it (H having only acknowledged receipt of an email).
  • It was a matter for the FTT not H, and the AAs had had the benefit of legal advice from their solicitors and would, or ought to, have been told as much.

It was, in fact, evident that the AAs had simply failed to put any proper evidence before the FTT to explain the delay, let alone for the request for an informal review (which appeared not to have been made in any event). Clearly the UT was unimpressed with the “[u]nsubstantiated and general references to ‘a number of compulsions’ and ‘pressing circumstances beyond their control’ [which] were wholly inadequate for the purpose of providing an explanation.” Furthermore, references to circumstances which were said to have been in the AAs’ initial representations, made before the service of the final notices, could hardly explain a subsequent delay in filing an appeal against those very notices!

The UT considered that the FTT was entitled to have regard to the fact that the AAs had the benefit of legal advice and representation throughout the process, including from before the service of the final notices. There was a complete lack of evidence of any suggestion that communications between the AAs and their advisers was not timely, or that there had been any reason why the solicitors were not able to provide proper advice or comply with their clients’ instructions. There was simply no prospect of the FTT being able to have regard to some of the language and financial difficulties which the AAs’ solicitor referred to in his oral submissions. In short, there was a lack of any proper explanation for a delay of as long as ten days, such that the FTT was entitled to refuse to exercise its discretion in the AAs’ favour. As it was impossible to suggest that the FTT’s decision was not one which was properly open to it, the appeal was dismissed.

Conclusion

Unless a statute or rule provides otherwise, the FTT has a discretionary power to extend time for filing a notice of appeal, even if the application for an extension is not made until after the time limit has expired. It is clear, however, that late appeals are not to be encouraged and applications made out of time will be subject to considerable scrutiny through the lens of the courts’ approach to procedural non-compliance and relief against sanctions.

As ever, all cases turn on their respective merits, but whatever the length of the delay, the significance (or seriousness) of which will be judged generally by reference to the original time for performance, any application must be supported by evidence which addresses squarely the issue of the delay, giving proper reasons; and, whenever possible, material which will enable the FTT to be quickly persuaded that the Appellant’s case is so strong that the outcome is clear, or that the circumstances taken as a whole outweigh any possible prejudice to the respondent.

Advisers must, at all costs, avoid nebulous or platitudinous, prolix and jejune verbiage: it is a red rag to a bull, and immediately identified by any tribunal as probably a clear and evident signpost to there being no proper reason for the delay. As Lord Neuberger stated in BPP Holdings, the decisions of the courts on the application of the Civil Procedure Rules provide “a salutary reminder as to the importance that is now attached in all courts and tribunals throughout the UK to observing rules in contentious proceedings generally.”

Article originally published on Thomson Reuters on the 17/12/2019.