The Court of Appeal rules certain selective licensing conditions unlawful

April 13, 2018

Alistair Cantor considers Brown v Hyndburn Borough Council [2018] EWCA Civ, a case with important implications for many local authorities.

The Appellant was a private sector landlord acting in conjunction with the other 346 members of the Hyndburn Landlord Association, a representative body of private landlords in the Hyndburn area.  The Respondent was the local housing authority for that area.

The Appellant owned a property within an area designated by the Respondent as a selective licensing area in August 2012.  When the Appellant sought a license for his property, one was granted but subject to conditions.  Two of those conditions were [9]:

(1) “If gas is supplied to the property a suitable carbon monoxide detector must be provided, maintained in good working order and tenants made aware as to its operation”

(2) “The licence holder must ensure, throughout the period of the licence that the premises are covered by a valid Electrical Installation Condition Report (“EICR”), where the report states the installation is unsatisfactory this must be remedied within 38 days and the licensing team notified upon completion of such works. If a report recommends a re-test during the term of the licence, an up to date report must be provided to the landlord licensing team within 7 days of the re-test date.”

 The conditions were imposed under s90 of the Housing Act 2004 (“the Act”) which provides as follows:

(1) A licence may include such conditions as the local housing authority consider appropriate for regulating the management, use or occupation of the house concerned.

 (2) Those conditions may, in particular, include (so far as appropriate in the circumstances)–

 (a) conditions imposing restrictions or prohibitions on the use or occupation of particular parts of the house by persons occupying it;

(b) conditions requiring the taking of reasonable and practicable steps to prevent or reduce anti-social behaviour by persons occupying or visiting the house.

 (3) A licence may also include–

 (a) conditions requiring facilities and equipment to be made available in the house for the purpose of meeting standards prescribed for the purposes of this section by regulations made by the appropriate national authority;

(b) conditions requiring such facilities and equipment to be kept in repair and proper working order;

(c) conditions requiring, in the case of any works needed in order for any such facilities or equipment to be made available or to meet any such standards, that the works are carried out within such period or periods as may be specified in, or determined under, the licence.

 (4) A licence must include the conditions required by Schedule 4.

 (5) As regards the relationship between the authority’s power to impose conditions under this section and functions exercisable by them under or for the purposes of Part 1 (“Part 1 functions”)–

 (a) the authority must proceed on the basis that, in general, they should seek to identify, remove or reduce category 1 or category 2 hazards in the house by the exercise of Part 1 functions and not by means of licence conditions;

(b) this does not, however, prevent the authority from imposing (in accordance with subsection (3)) licence conditions relating to the installation or maintenance of facilities or equipment within subsection (3)(a) above, even if the same result could be achieved by the exercise of Part 1 functions;

(c) the fact that licence conditions are imposed for a particular purpose that could be achieved by the exercise of Part 1 functions does not affect the way in which Part 1 functions can be subsequently exercised by the authority.

Since no regulations had been made under s90(3), and the conditions were not ones required to be imposed under s90(4), the Respondent in imposing the conditions had to have been exercising powers under s90(1) and (2) [36].

The Appellant contended the imposition of said conditions was unlawful.  They were also of wider significance, since landlords might be subjected to criminal sanction for breaching such conditions and local authorities might in future elect to impose other, more onerous conditions.

The Appellant appealed to the FTT in respect of the conditions, and was successful, the FFT agreeing that the Respondent had had no power to impose them under s90(1) of the Act.  In the FTT’s view, they went beyond regulating the “management, use or occupation of a house concerned” [11].  That term could not be “stretched” to impose requirements on landlords to improve properties, rather than conditions calculated to address the difficulties at which selective licensing was aimed, being low demand for housing or anti-social behaviour [11].

The FTT modified the clause concerning the carbon monoxide detector so as to provide that if a detector was provided the landlord was obliged to provide written confirmation of who was responsible for its maintenance, in which modified form it fell within the scope of the “management” of a property and so was permitted by s90(1).  The condition relating to the EICR was deleted in its entirety [12].

The Respondent successfully appealed to the Upper Tribunal.  HHJ Gerald disagreed that the conditions fell outwith regulating the management of the property concerned, and thus the Respondent had been within its discretion to impose them.  He reinstated the two conditions in their original form.

The Appellant appealed to the Court of Appeal on three grounds (set out at [44] of the judgment).  The appeal succeeded on all grounds raised.  Hildyard J gave the leading judgment, with whom King LJ and Underhill LJ agreed while adding their own reasons in relation to aspects of the case.

In respect of the first ground of appeal, the court noted that prima facie conditions such as these might understandably be regarded in common parlance as relating to the management of a property.  But “management” of a property had to be interpreted in the context of the section and Part 3 as a whole [36(2)].  A consideration of Parts 1 to 3 of the Act demonstrated a distinction between (a) conditions regulating the management, use and occupation of a house, and (b) conditions regulating its condition and contents [47]. This distinction was illustrated by a comparison with s67(1) of Part 2 of the Act, which permitted conditions of both types to be imposed in respect of HMO licenses [48] and furthermore explicitly referred to the provision and maintenance of “facilities and equipment” [49].  By contrast, s90(1) provided only for the regulation of the management, use and occupation of a house, not of its condition and contents [48] and with no reference to facilities and equipment [49].  This was intentional [49/84]. Further, while s90(5) appeared to suggest a power to impose conditions to remove or reduce category 1 and 2 hazards, additional to enforcement powers under Part 1 of the Act, any such power was linked to s90(3) and not s90(1) powers [52].  The court concluded therefore that s90(1) conferred no power to impose conditions relating to the conditions and contents of a house, as these conditions were directed to.  Therefore, the first ground of appeal succeeded.

Secondly, even if s90(1) were held to confer such a power, the power could only be exercised in pursuit of the purpose for which it was conferred.  Licensing under Part 3 was directed to addressing the management, use or occupation of private sector accommodation as it affected others in the locality, with a view to ameliorating the problems of low housing demand and anti-social behaviour which occasioned designation as a selective licence area. The court rejected the Respondent’s argument that there was no link between the statutory test for designating a licensing area and the subsequent imposition of conditions to regulate properties within such an area [56].  While a measure of discretion was to be afforded to a local authority in determining whether a particular condition was directed to the statutory purpose, and there need not be a direct and unequivocal link, the powers were conferred for that purpose and therefore confined to imposing conditions for that purpose [57].  Since the Respondent accepted the conditions were not so directed, the second ground of appeal was also well-founded.

As to the third ground of appeal, the Respondent had asserted a residual discretion arising under s90(5) to impose license conditions to address hazards, both in respect of individual properties and generally within a licensing area wherever it felt that a particular hazard would better be addressed by such means as opposed to the powers arising under Part 1 [61].  So long as decisions to that end were made lawfully, were not irrational and were not intended to duplicate or replace Part 1 functions, they were permissible [63].  The court rejected that proposition on consideration of the Act as a whole.  No power arose under s90(5), which was directed to enshrining the primacy to be accorded to procedures of review, inspection and enforcement under Part 1 of the Act, and ensuring that conditions imposed under s90(3) (as and when regulations were enacted) would not be precluded by any overlap with Part 1 duties and powers [65-67].

Discussion

This decision will be of undoubted significance to the many local authorities now operating a selective licensing regime for private landlords.  The Court of Appeal has made clear that as the law stands any condition directed to the condition and content of a property, or the provision or maintenance of facilities and equipment therein, rather than its management, use and occupation, will be unlawful.

Many local authorities have regarded the selective licensing regime as a means of managing housing standards and hazards in private rented accommodation, a means with real teeth given the availability of criminal sanction in the case of breaches of licensing conditions.  In many cases, authorities have included standard conditions in licenses addressed to condition/content and facilities/equipment to that end.  The Court of Appeal has now ruled such measures unlawful, opening the prospect of future challenges.

All local authorities operating a licensing regime would be well advised to review their licensing conditions, if they are not doing so already.  It should be noted that if it is indeed possible to tie a particular condition properly to the management, use and occupation – in the words of Underhill LJ “what happens at and to the property” [85] – it may be lawful.  The example provided to the Court of Appeal was a requirement that landlords be required to promptly re-glaze windows that were broken rather than permitting them to remain boarded up.  In obiter comments, the court mused that that may be held to be an aspect of management, even if it came “close to the boundary” with conditions [85].  Each particular condition will have to be considered individually in the circumstances and in light of the statutory objectives.

The judgement can be found here.

 

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