Tariq Khuja & Anor v Cherwell District Council

Under section 251 of the Housing Act 2004, a director’s consent to a company offence requires proof that the director knew the facts constituting the offence. Consent may be inferred, but not solely from being the company’s sole director. Knowledge acquired after the offence, while helping to remedy it, does not establish prior consent. A director’s responsibility or failure to know may instead be relevant to neglect, a distinct statutory basis. When penalties are imposed on both a company and its owner-director, the tribunal must consider the financial effect of the company penalty on the individual. The appeal was allowed and the director’s penalty cancelled.

Cherwell District Council imposed financial penalties on OX1 Limited, the landlord of three flats, and Mr Khuja, its sole director and shareholder, for housing management offences. The First-tier Tribunal confirmed and varied both penalties to £11,000, finding that the company’s breaches were committed with Mr Khuja’s consent because he was its sole director and controlling mind. Mr Khuja appealed only the penalty imposed on him. The Upper Tribunal considered whether the finding of consent met section 251 of the Housing Act 2004 and whether the Tribunal had properly accounted for the effect of the company’s penalty on Mr Khuja.

1. Consent under section 251. Section 251 of the Housing Act 2004 requires proof of consent, connivance or neglect; those are distinct grounds. Consent requires knowledge of the material facts constituting the offence, though that actual knowledge may be inferred. The Tribunal drew that requirement from Attorney-General’s Reference No 1 of 1995 [1996] 1 WLR 970. R v Chargot Limited (t/as Contract Services) & ors [2009] 1 WLR 1 confirms that consent may be inferred, but does not specify the knowledge required. The neglect authorities, including R v P [2008] ICR 96 and Wotherspoon v H M Advocate (1978) JC 74, concern the relevance of an officer’s responsibilities to neglect; they do not substitute for proof of knowledge when consent is alleged.
2. Application to the finding against Mr Khuja. The First-tier Tribunal found consent solely because Mr Khuja was the company’s sole director and controlling mind. It made no finding, by direct evidence or inference, that he knew of the breaches before they were identified. His later knowledge, while he worked with the Council to remedy them, could not establish that the earlier breaches were committed with his consent. The explanation for personal liability was unsustainable and was set aside.
3. Double counting. There is no rule requiring a tribunal first to calculate one overall penalty and then apportion it between a company and its director. But it must consider whether the company penalty makes the individual worse off, especially where the company is a solvent one-man business. The Court of Appeal explained that principle in Sutton v Norwich City Council [2021] EWCA Civ 20. The First-tier Tribunal mentioned double counting but did not consider it when setting the penalties. This ground would independently have succeeded, even if the consent ground had failed.
4. Disposal. The matter was not remitted. The evidence disclosed no basis on which the Council could prove prior knowledge, and a neglect case would require further evidence about the company’s arrangements with its managing agent and the relevant responsibilities. Remission would be disproportionate and unfair, particularly as the company’s penalty stood and only £1,000 of Mr Khuja’s penalty exceeded it. The Tribunal set aside the decision confirming and varying Mr Khuja’s penalty and substituted a decision cancelling it.

1. Upper Tribunal (Lands Chamber) — In [2026] UKUT 363 (LC) , allowed Mr Khuja’s appeal, set aside the First-tier Tribunal’s decision confirming and varying his penalty, and substituted a decision cancelling it. The penalty against OX1 Limited was not under appeal and remained in force.
2. First-tier Tribunal (Property Chamber) — Confirmed and varied the penalties against Mr Khuja and OX1 Limited to £11,000 each. The decision citation is not stated in the judgment.