London Residentials Ltd v London Borough of Newham

When assessing financial penalties, a tribunal must consider only matters relevant to the breaches for which penalties were imposed. A finding of an additional breach may constitute an error of law if the tribunal’s references to the relevant circumstances or breaches show that it may have influenced the penalty. Where a tribunal considers financial information necessary to assess proportionality, it must identify the information required, seek it and allow a reasonable time for its production. The mere passage of time does not amount to an opportunity to provide evidence. This obligation is particularly important where existing evidence indicates that further information is available, relevant and unlikely to be futile.

London Residentials Ltd appealed against the First-tier Tribunal’s dismissal of its appeals against financial penalties imposed by London Borough of Newham. The penalties concerned alleged breaches of regulation 3 of the Client Money Protection Schemes for Property Agents (Requirement to Belong to a Scheme etc.) Regulations 2019 and section 83(6) of the Consumer Rights Act 2015.

The First-tier Tribunal also found a breach of regulation 4, although no penalty had been imposed for that breach. It considered the penalties proportionate without obtaining further financial information. The central issues were whether the tribunal had taken an irrelevant matter into account and whether it should have sought and awaited further evidence about the appellant’s means.

1. Appeal and error concerning an irrelevant matter. The Upper Tribunal set aside the First-tier Tribunal’s decision. The finding of a breach of regulation 4 was irrelevant to the penalties imposed for breach of regulation 3 and section 83(6). Although the First-tier Tribunal discussed the facts underlying the latter breaches, its references to the circumstances, breaches and seriousness of the breaches were broad enough to indicate that the regulation 4 finding may have influenced its decision on liability and penalty amounts. That was an error of law.
2. Financial information. The First-tier Tribunal also erred in law by failing to seek and await further financial information. The mere passage of time before determination did not give the appellant an ample opportunity to provide evidence. The tribunal had to give that opportunity and identify what information was required beyond the material already supplied.
3. The appellant’s accountants had indicated that the penalties might force the business into liquidation and that they could provide evidence of the company’s deficit. In those circumstances, the appellant could not fairly be characterised as having chosen not to provide information merely because it had not supplied further material without being asked. In any event, the tribunal knew that further evidence was available and that obtaining it would not be futile.
4. The appeal had been decided on the papers. Seeking and awaiting the evidence would therefore have caused minimal practical disruption. Given the size of the penalties and the evidence of a substantial deficit, doing so would not have been disproportionate. The failure was material because the further evidence would have shown, at least, that the appellant could not afford to pay the penalties.
5. The appeal was allowed to the extent of remittal. The case was remitted to the First-tier Tribunal for an entirely fresh rehearing. The rehearing panel was directed to contain no member of the original panel.

• Upper Tribunal (Administrative Appeals Chamber): The appeal from the First-tier Tribunal was allowed to the extent of remittal. The First-tier Tribunal decision was set aside and the case was remitted for an entirely fresh rehearing.
• First-tier Tribunal (General Regulatory Chamber): The appeals under references PR/2022/0012 and PR/2022/0013 were dismissed. The tribunal found breaches of regulation 3, regulation 4 and section 83(6), and upheld penalties of £20,000 and £4,000.