Proving that there is a reasonable excuse: financial penalties and rent repayment orders

In a previous blog I discuss what circumstances could amount to a reasonable excuse.

The Upper Tribunal (Lands Chamber) recently considered in IR Management Services Limited v Salford City Council [2020] UKUT 81 (LC) where the burden of proof lies when a defence of reasonable excuse is raised under the HMO management regulations.

This arose out of an appeal against a financial penalty under the Housing and Planning Act 2016 rather than a criminal prosecution. The manager of the HMO had argued that it did not know that the property in question was an HMO, and that this amounted to a reasonable excuse for the breach of Regulation 4(4). They said, they should not be punished for not having the correct fire doors and fire alarm system when they did not know that the HMO standards applied to the Property.

The question for the Upper Tribunal to consider was whether the manager had to prove that they had a reasonable excuse, or whether the local authority had to prove (beyond reasonable doubt) that the manager did not have a reasonable excuse. Both sides pointed to examples whether the courts had interpreted other examples of ‘reasonable excuse’ defences in their favour.

The Upper Tribunal drew a distinction between laws which include the absence of a reasonable excuse as an element of the offence, and others where the reasonable excuse defence is provided separately from the description of the offence. In the latter category (which includes offences under the Housing Act 2004) the burden of proving a reasonable excuse falls on the defendant (to be proved on the balance of probabilities). This is departure from the presumption of innocence, but one which has long been recognised by the courts as legitimate.

By contrast, Regulation 6(1) of the coronavirus restrictions (“During the emergency period, no person may leave the place where they are living without reasonable excuse”) will presumably place the burden of proof on the prosecutor.

Reasonable excuse, rent repayment orders and financial penalties under the Housing Act 2004

At the conclusion of his judgment in IR Management Service Ltd, the Deputy Chamber President states:

“I would add, finally, that the issue of reasonable excuse is one which may arise on the facts of a particular case without an appellant articulating it as a defence (especially where an appellant is unrepresented).  Tribunals should consider whether any explanation given by a person managing an HMO amounts to a reasonable excuse whether or not the appellant refers to the statutory defence.”

This instruction to the judges in the First-tier Tribunal should be welcomed. There are no ‘duty solicitors’ in the First-tier Tribunal and landlords and agents can face financial penalty of up to £30,000 per offence. Unrepresented individuals may not realise that they have a defence, particularly if they have been told by the local authority that they do not.

If the Tribunal is under a duty to consider possible reasonable excuse defences even when they are not articulated as such, this duty certainly also applies to Local Authorities before they impose a financial penalty. Indeed, Local Authorities have an additional role as investigators to consider all reasonable lines of enquiry before imposing sanctions or starting prosecutions.

That strict investigatory duty will not apply to tenants making an application for a rent repayment order, but since the defence of reasonable excuse will apply to ‘failure to licence’ offences (which are the most commonly seen basis for rent repayment orders) tenants should give some thought to whether their landlord has a reasonable excuse. For the reasons set out above, it will be for the landlord to prove that they have a reasonable excuse, but often tenants will be able to provide evidence which is relevant to that issue. That could be evidence which calls into question the accuracy of the landlord’s excuse, or it might be details which make an excuse less reasonable than it first appears.

*Disclaimer: The information on the Anthony Gold website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. It is provided without any representations or warranties, express or implied.*